Baxter International Inc.

Good morning, ladies and gentlemen, and welcome to the Baxter International's first quarter 2021 earnings conference call. Your lines will remain in the listen-only mode and to the question and answer segment of today's call. At that time, if you have a question, you will need to press star then 1 on your touchtone phone. If anyone should require any assistance during the conference, please press star then 0 on your touchtone phone. As a reminder, this call is being recorded by Baxter and is copyrighted material. It cannot be recorded or rebroadcast without Baxter's permission. If you have any objections, please disconnect at this time. I would now like to turn the call over to Ms. Claire Trackman, Vice President, Investor Relations at Baxter International. Ms. Trackman, you may begin.

Good morning and welcome to our first quarter 2021 earnings conference call. Joining me today are Joe Almeida, Baxter's Chairman and Chief Executive Officer, and Jay Saccaro, Baxter's Chief Financial Officer. On the call this morning, we will be discussing Baxter's first quarter 2021 financial results and full year 2021 financial outlook. Please note, starting this quarter, the financial schedule, which breaks out sales by key product categories, will now include the sales of our biopharma solutions contract manufacturing unit. Historical schedules reflecting this new structure, along with a supplemental presentation to complement this morning's discussion, can be accessed on our website in the investor section under events and news. This presentation includes related non-GAAP reconciliations. With that, let me start our prepared remarks by reminding everyone that this presentation, including comments regarding our financial outlook for the second quarter and full year 2021, new product developments, business development, and regulatory matters contain forward-looking statements that involve risks and uncertainties. And of course, our actual results could differ materially from our current expectations. Please refer to today's press release and our SEC filings for more detail concerning factors that could cause actual results to differ materially. In addition, on today's call, non-GAAP financial measures will be used to help investors understand factors ongoing business performance. A reconciliation of the non-GAAP financial measures being discussed today to the comparable GAAP financial measures is included in our earnings release issued this morning and available on our website. As mentioned in our press release this morning, during the first quarter, Baxter strengthened its European and global pharmaceuticals portfolio with the acquisition of the rights for certain territories outside the U.S. to the widely prescribed chemotherapy medication Calix, also known as Doxil in several geographies, including the U.S. This strategic acquisition, which closed on February 17th of this year, supplements factors previously existing U.S. rights to Doxil, which the company acquired in 2019. As a result of this acquisition, on the call this morning, we will be discussing operational sales growth, which adjusts for the impact of foreign exchange, as well as the international sales of Halix and Doxil. Now I'd like to turn the call over to Joe. Joe?

Thank you, Claire. Good morning, everyone, and thank you for joining today's call. I hope that you and your loved ones are healthy and safe. I'll begin with an overview of Baxter's first quarter performance. Jay will take a closer look at the financials, including our outlook for Q2 and the year as a whole. Then we'll close with Q&A. Baxter delivered first quarter sales growth of 5% on a reported basis and 1% on both a constant currency and operational basis. This represents solid performance in the face of an unprecedented pandemic, as well as a challenging year-over-year comparison, given the heightened sales we experienced a year ago as our customers prepared for the impact of COVID-19. On the bottom line, first quarter adjusted earnings per share of 76 cents declined 7%. This decrease reflects the negative year-over-year impact of COVID on our results in the quarter. On a segment basis, Asia-Pacific delivered growth of 8% at constant rates. This growth reflects the strength across the region, while much of the region is progressing in its recovery. We continue to monitor the situation in India, which is experiencing the highest COVID infection rates around the world. Sales results in the MEA were flat year over year and declined 1% in the Americas, also at constant currency rates. Sales in both of these segments continue to be impacted by lower rates of hospital admissions and surgical volumes due to the pandemic. Looking at performance by business. acute therapies led growth across all of our product categories with sales increasing 28% on a constant currency basis. Results were driven by ongoing heightened demand globally for Baxos continuous renal replacement therapy or CRT technology amid COVID-19. As we discussed last year, we expect acute therapies demand to recede from its pandemic peak and return to more typical levels over the course of the year. Our biopharma solutions business advanced 11% year-over-year on a constant currency basis, driven by our partnerships to assist in manufacturing the COVID-19 vaccines. Renal care, clinical nutrition, pharmaceuticals all grew at low single digits, a constant currency. Growth in renal care continues to be driven by demand for our peritoneal dialysis or PD products globally. I would point out that demand for both our e-center, HD, and PD businesses has been dampened by depressed patient volumes driven by higher mortality rates for ESRD patients in the wake of the pandemic. We expect ESRD patient volumes to stabilize and return to normal over the next 18 to 24 months, but the pace of their recovery may vary by market. PD growth is expected to continue outpacing HD growth market-wide for the foreseeable future. Beyond the general lifestyle benefits of home-based PD, this therapy continues to be recognized as a viral treatment option amid pandemic conditions. In addition, the new CMS End-Stage Renal Disease Treatment Choices, or ETC, payment model went into effect in the U.S. at the start of the year, which supports expanded access to home therapies. HD will remain a critical treatment option in numerous markets. As a pioneering dialysis broadly, Baxter is committed to innovation across both modalities, enabling clinicians and patients to make the right treatment choices based on their distinct needs. Last quarter, I highlighted the FDA's five-pancake clearance of our home-choice CARA APD cycler as one more way we are supporting PD growth in the U.S. More recently, we received 510K clearance of our leading-edge AK98 hemodialysis system, a proven platform that is currently used in more than 90 countries worldwide and now launching in the U.S. Growth in our clinical nutrition business reflected demand for Baxter's multi-chamber nutritional product offerings in the U.S. and APEC markets, as well as nutrition compound growth in EMEA. Pharmaceuticals growth was driven by continued strength in our international pharmacy compound business as well as the benefit from the recent acquisition of Calix Doxil rights in selected territories outside the U.S. This acquisition further strengthens our pharmaceutical support for the global and in particular represents a platform to accelerate growth in Europe. Adjusting for the Calix and Doxil acquisitions and foreign exchange, pharmaceuticals declined low single digits year over year. Performance in the quarter reflects the challenge in comparison to the prior year quarter, which occurred before a marked decline in hospitalizations and surgical volumes due to the pandemic, intended with heightened sales as hospitals stocked up on few supplies as the pandemic emerged. Medication delivery and advanced surgery both declined mid-single digits as constant currency rates as these businesses were also impacted by lower rates of hospitalizations and surgical procedures, as well as the challenge in comparison to the prior year quarter. That said, we're seeing gradual steady recovery in these trends. I expect this to continue over the course of the year, particularly as the rate of COVID vaccinations improves globally. In medication delivery, we are also excited by the potential of our NovumIQ infusion platform, including our DoseIQ safety software and IQ Enterprise digital connectivity suite. NovumIQ was resubmitted for FDA 510K clearance earlier this month. We look forward to advancing this application and anticipate introducing this exciting technology to the U.S. in the second half of this year. We also remain committed to broadening our presence globally for Novo MyQ and currently expect to introduce this platform in Europe in 2022 as we work to enhance our product offering to address the specific needs of this region. As I wrap up, I would like to reinforce that Baxter is both well-prepared and well-positioned for the future. The essential nature and durability of our portfolio, the breadth and diversity of our product lines, our expansive geographic footprint, and the impact of our transformation all taken together fuel our resilience, adaptability, and agility. We remain focused on advancing innovation, the key to sustained growth in any industry. We have a lot to look forward to across our businesses, including new therapeutics and increasingly new value-added digital solutions. You may hear about many of these at our upcoming investor conference and some even sooner. And to supplement our organic pipeline, we will continue to pursue attractive BV opportunities in our core portfolio and key adjacencies, as well as complement our businesses. and our 50,000 employees remain absolutely dedicated to advancing our mission for patients, and we are committed, as ever, to returning value to our shareholders. Now, I'll pass it to Jay for a deeper dive into our financials and outlook.